Incoterms (International Commercial Terms)
are the 3-letter acronyms used in international
For example, the incoterm CFR
stands for Cost and Freight, meaning the supplier
covers the costs to clear the goods for export, and to
freight the goods to the named port of destination.
If the incoterm was CIF, meaning
Cost, Insurance and Freight, the supplier would
additionally have to take out insurance to cover the
risk of damage to the goods.
Some other commonly used incoterms are:
CIP (Carriage & Insurance Paid to)
FOB (Free on Board)
FCA (Free Carrier)
What is an indemnity? If a party indemnifies another
it means it will cover any losses that the indemnified
party incurs. Indemnity clauses are common in
Direct Procurement is the procurement of
goods/services that are directly related to the
'product' being manufactured/resold.
For example, with an engineering firm designs and
builds hydraulic pumps, the direct procurement spend
would include the machined parts, check valves, pulse
timers, casings etc, that go into the pumps.
On the other hand, Indirect Procurement is the
procurement of goods/services that are not directly
related to the 'product'.
Using the previous example, the indirect procurement
spend would include consumables (rags, gloves,
earplugs), lubricants, testing equipment etc
A contract term that is not clearly defined as a
condition or warranty is classified as a Innominate
Term. If there is a breach of an innominate term, a
court has to evaluate the degree of 'injury' the breach
has caused, and make a decision as to whether it is a
condition or warranty.
If the court classifies the breach as a condition, the
injured party may retract their obligations under the
contract, or claim damages.
Inventory Management is the process of
keeping the right levels of stock to suit requirements,
analyzing and monitoring the movement of stock
throughout the ERP system and stores, and reducing dead